Uzbek government fiscal policy generates popular discontent

Esmer Islamov

In its recent report on the Andijan events, Human Rights Watch cited frustration over "endemic poverty, corruption [and] unemployment" in Uzbekistan as a factor that drove local residents to join the anti-government protest that culminated in a "massacre." Fiscal moves implemented by President Islam Karimov's administration less than two weeks before the Andijan events help illustrate how government policy is fueling, rather than alleviating popular frustration over deteriorating living standards.

On May 1, the Uzbek government raised minimum monthly wages, pensions, stipends, and welfare allowances by 20 percent. In Uzbekistan -- where the government maintains tight control over all aspects of the economy and has steadfastly resisted international pressure for reform -- the action generated the opposite from the intended effect: rather than harboring feelings of happiness and gratitude, many Uzbeks were filled with a sense of dread. There is a widespread belief among Uzbeks that the pay increases were designed to mask even higher price hikes.

"We are scared of such increases in our pensions," says Otabek Kurbanov, a pensioner in Tashkent. "They always mean we will grow poorer, because prices rocket immediately and the increase in the prices is always larger than that in our pensions."

Indeed, even before the implementation of the wage and welfare hikes, prices for essential commodities began to rise sharply. For instance, eggs in Tashkent's Yunus-Abad market cost 90-110 Uzbek sum each on April 29, up from 70-90 sum at the beginning of the month. "These increases never do any good. They mean the government will increase the prices for utilities and bus fares soon. All the prices in the market have already gone up," Gulnoza Azimova, a teacher in Namangan, told EurasiaNet.

In recent years, the Uzbek government has routinely raised wages and welfare payments once, or even twice per year. The most recent hike prior to May 1 occurred in August 2004. The government has also used these raises as an opportunity to charge more for gasoline, transportation, and utilities. Gasoline price hikes can have a powerful inflationary effect on other market sectors, causing the price of daily necessities to outpace the rise in income. The state's broad control over the economy means that a "black market" continues to exist in Uzbekistan, creating additional inflationary pressure.

Under the hikes implemented on May 1, the minimal monthly wages and pensions now stand 7,835 and 15,505 Uzbek sum respectively, with just 9,390 sum for the disabled and pensioners "without adequately long professional service." Such payments woefully inadequate, local political observers say. One expert estimated that a monthly wage of at least 100,000 sum was needed to keep a typical family in an urban area above the poverty line. With the present minimal pension of 15,505 sum, a pensioner can buy about ten pounds of meat or 150 eggs. Utilities cost about up to 5,000 sum.

"It cannot stay like this forever," said Kamol, resident of Namangan in Uzbekistan's volatile Ferghana Valley, who refused to give his last name fearing repercussions. "The government strains the nation's already very thin patience. This is why the revolutions in Georgia, Ukraine, and then Kyrgyzstan -- right next door -- caused such reaction in our people.

Editor's Note: Esmer Islamov is the pseudonym of a freelance journalist specializing in Uzbek political affairs.